Biotech's demise could hit South S.F.

Pfizer Inc.'s closure of Sugen Inc. could throw more than 200,000 square feet of space onto the South San Francisco market, almost doubling available lab space there and sending ripples throughout the local biotech real estate market.

"In a biotech market where there's already a lot of uncertainty, it's going to shake things up even more," said Dino Perazzo, vice president with CB Richard Ellis Inc. "It makes it difficult to do deals because you can't get your arms around what is a market (rate) deal."

Sugen's approximately 230,000-square-foot campus is almost equal to the amount of available research and laboratory space in South San Francisco, estimated at 240,000 to 300,000 square feet, said Perazzo.

There is around 6 million square feet of laboratory and research space in the city, making it one of the largest biotech real estate markets in the world.

Pharmaceutical giant Pfizer announced last week that it will "discontinue investment" in Sugen, as part of a series of consolidations stemming from the completion of its merger with Pharmacia.

A Pfizer spokesperson said the company hasn't made a final decision regarding its South San Francisco real estate -- a leased three-building campus at 230 East Grand Ave. developed by Slough Estates USA and Britannia -- but it's clear that the personnel it's retaining will be asked to relocate.

"We'll now discuss with the local management how to manage an orderly movement of research and development projects and people to our other sites," said Stephen Lederer, a spokesperson for Pfizer Global Research and Development. "The closest is a very large R&D site in La Jolla."

A Britannia spokeswoman said that neither Sugen nor Pfizer had yet contacted the company about their real estate plans, but said: "The leases are 30 years long, and they're still on the hook for them."

If the company chooses to sublease the space -- the likely scenario according to industry experts -- it will nearly double available laboratory and research space in South San Francisco and impact biotech prices throughout the Bay Area.

Perazzo said there are several significant pending deals that could be directly affected.

There is also approximately one million square of research space that is entitled to be built in South San Francisco, but awaiting anchor tenants.

"Bottom line: This is not going to help that space come to market any time soon," said Perazzo.